Charity Trading Arrangements

Charities may want to generate income from activities that don’t directly advance their charitable purposes.

Sometimes it is permissible for the charity to do this itself but often it is better to have a trading subsidiary to do it, particularly where the activity may pose a risk to the charity. We can help you navigate all of these complexities, ensuring compliance with charity law and regulation and minimising tax risks.

Key contacts

Paul Voller

Partner

+44 (0)20 7665 0865

Ensuring your charity's trading arrangements are structured correctly will enable you to remain compliant with charity law, meet the expectations of the Charity Commission, minimise operational risk and reduce tax burden.

We support charities of all sizes in reviewing their activities, identifying risks and opportunities and advising on practical trading structures and procedures to maximise opportunity and minimise risk in a way that is straightforward and easy to manage.

For charities operating internationally, we advise on managing relationships with overseas partners and protecting assets across borders. This helps safeguard your charity’s resources while ensuring all operations align with regulatory requirements.

With a pragmatic, insight-led approach, we help charities stay compliant without adding unnecessary complexity - giving you the confidence to run your organisation effectively and focus on making a difference.

Our expertise

With extensive experience advising on charity law requirements for both charitable and non-charitable activities, we provide clear, solutions-focused guidance tailored to your needs. Our advice is always practical, accessible, and designed to support effective decision-making - so you can focus on maximising your charity’s impact.

Our team advises on the following areas:

We review charities' current and proposed activities to see how they align with their charitable purposes and help them decide whether and what activities should be organised through a subsidiary. Our team will identify potential legal and tax risks, provide advice to mitigate these risks and ensure compliance with charity law and regulation. This helps charities to protect their assets, including their reputation while maintaining focus on the charity's mission.

Many charities engage in trading activities beyond their charitable purposes, which can carry financial or regulatory risks. We assist charities in establishing trading subsidiary companies for activities that might pose a risk to the charity or don’t directly further its charitable purposes. Our service focuses on structuring these subsidiaries effectively to minimise risk and ensure legal compliance, all while keeping things simple for smooth ongoing management.

Charities that operate non-charitable subsidiaries must carefully manage their relationships to remain compliant with Charity Commission guidance. We advise on the relationship between charities and their non-charitable subsidiary, ensuring compliance with law and regulation. This includes protecting your charity’s assets including trademarks, and resources, and advising on how the charity can fund the subsidiary effectively while adhering to legal requirements.

For charities involved in trading overseas, we provide support on charity law, tax implications, and regulatory requirements. Where the laws of other countries are involved, we are normally able to introduce reliable local legal advice to help ensure the charity's international activities comply with charity law and that the charity’s assets are properly protected.

The team draws on the strengths and knowledge of their lawyers to ensure that solutions are approached from a 360-degree angle. Responses from VWV are not only speedy but also accurate and detailed.

Chambers & Partners

Our work highlights

Supporting an educational charity in acquiring a recreation ground by establishing a wholly owned non-charitable subsidiary to manage its operation. This included advising on governance arrangements, leasing structures, and a management agreement to ensure compliance and efficiency.

Assisting a charity in streamlining its operations by transferring its subsidiary’s trading activities back into the charity and overseeing the subsidiary’s dissolution, ensuring a smooth and compliant transition.

Advising a charity on funding its subsidiary through a strategic share subscription and capital reduction. This involved securing Charity Commission approval to proceed, ensuring the transaction aligned with regulatory requirements and the charity’s objectives.